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Local sovereign debt: calming down


Yesterday, the correction on the market continued, though at a more moderate pace. The long benchmarks ended the session 0.3-0.4pp lower in price and the belly slid 0.2pp, pushing the curve 6-8bp higher in yield. RFLB 28 (YTM 10.50%) and RFLB 20 6.40 (YTM 10.67%) lagged amid news about new supply, slipping 0.4pp and 0.3pp in price, respectively.

Separately, yesterday the Ministry of Finance completed the placement of the debut inflation-indexed OFZ issue. According to its press release, the new instrument garnered solid demand of RUB 198bn, but the ministry deliberately placed only half (RUB 75bn) of the offered size, with 59% of the issue allocated among asset and pension funds, while 41% was sold to banks in order to underpin liquidity in the secondary market. The share of non-residents amounted to 26%. Subsequent RFLBI placements are to be done through regular weekly auctions. At the moment, the issue is quoted at 93.65, implying a real yield of 3.44%.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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